UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Rel. No. 17633 / July 26, 2002
Court Issues$190,000 Asset Freeze Against Rhode Island Broker David Ullom, a Relief Defendant, in Connection with Alleged Fraudulent Offering Scheme
SEC v. Dennis Herula et al. (United States District Court for the District of Rhode Island, C.A. No. 02 154 ML, filed April 1, 2002)
The Commission announced that, on July 17, 2002, the Rhode Island federal district court entered an order imposing a $190,000 asset freeze against David L. Ullom, branch office manager of the Cranston, Rhode Island office of Raymond James Financial Services, Inc., in connection with an alleged fraudulent scheme that raised at least $52 million from investors between 1999 and 2001. The Commission named Ullom as a relief defendant in its complaint and does not accuse Ullom of any wrongdoing; rather, the Commission alleges that Ullom received approximately $190,000 in investor funds to which he has no legitimate claim.
The Commission alleges in its complaint, filed April 1, 2002, that individuals associated with an entity formerly known as Brite Business made fraudulent representations to investors, promising exorbitant returns through a high yield trading program. According to the Commission's complaint, most of the Brite Business investor funds were maintained in a brokerage account at Raymond James' Cranston, Rhode Island office. The complaint alleges that Dennis Herula was a registered representative at the Cranston office of Raymond James and was the designated representative for the Brite Business account. The complaint further alleges that, between 1999 and 2001, Herula and others associated with Brite Business misappropriated, transferred or lost approximately $20 million in investor funds. According to the Commission's complaint, Ullom received $190,000 in Brite Business investor funds to which he was not entitled and for which he performed no services. The Commission alleges that those funds should be returned to investors. The Court held a hearing on May 10, 2002 concerning Ullom and his receipt of the investor funds. On July 17, the Court issued a Memorandum and Order freezing $190,000 of Ullom's assets, based on its finding that the Commission is likely to succeed in proving that Ullom has no legitimate claim to those funds.
For further information, please see, Litigation Release No. 17514 (May 13, 2002); Litigation Release No. 17461 (April 5, 2002); Litigation Release No. 17334 (January 24, 2002)[subpoena enforcement action against Defendant Capalbo]; and Litigation Release No. 17325 (January 16, 2002)[subpoena enforcement action against Defendant Herula].